Switzerland should no longer be a haven for tax evaders if it wants to remain
a major financial centre, according to the chairman of one of the country's
largest banks.

Kaspar Villiger, chairman of UBS, on Thursday admitted there had been a "paradigm shift" in attitudes towards tax and that Switzerland should end its culture of banking secrecy.

"Switzerland ought not to be a financial centre for tax evaders. The financial sector cannot become involved in tax crimes," said Mr Villiger.

"For years, banking confidentiality was a key part of the Swiss financial centre's appeal. Other states are no longer prepared to accept their citizens evading tax in this way. This paradigm shift occurred unexpectedly quickly and with enormous force. Switzerland was forced on the defensive and has had to ward off attacks from all sides."

"Banking confidentiality is increasingly losing its legitimacy," he added.

UBS runs one of the world's largest private banks and has been named in cases involving tax avoidance by wealthy individuals, notably in the US, where the authorities are investigating allegations it helped clients hide assets in their Swiss accounts.

French and German prosecutors have also brought cases against the bank over similar accusations.

Mr Villiger cautioned that Switzerland's banks "must not serve as the extended arm of foreign tax authorities" and that any deals with foreign governments must allow the country a "reasonable means of regularising the past".

The comments came at UBS's annual general meeting, where the bank came under pressure from shareholders over the amounts it has paid to top staff.

Mr Villiger, who was presiding over his last shareholder meeting, was forced to defend a Sfr4m (£2.7m) signing on bonus awarded to his replacement, Axel Weber, the former head of the Bundesbank.

Also under scrutiny was the undisclosed amount paid to former Bank of Americal Merrill Lynch banker Andrea Orcel, who will join in July as head of its investment banking division.